Financial impact of COVID-19 on employees. Financial stress is high and employees are worried about healthcare costs, everyday expenses and how the pandemic will impact their retirement.
An astounding 10 percent of employees exhausted their emergency savings within the first two weeks of the pandemic, according to research by Edelman Financial Engines. Just one month into the crisis, almost a third of employees had depleted their emergency funds and stopped contributing to their retirement accounts.
“Large numbers of American workers are suffering financially, and their plight is likely to linger even after the economy begins to recover,” said Kelly O’Donnell, Executive Vice President at Edelman Financial Engines and head of the firm’s workplace business.
Financial Impact of COVID-19 on Employees
Most employees (52 percent) are concerned about the value of their retirement savings or other investment accounts. More than 25 percent of workers have already dipped into their retirement or plan to do so soon, according to research by Bankrate. Another survey by TD Ameritrade found that over 70 percent of employees expect the pandemic to impact their senior years and more than 20 percent believe that impact will likely be severe.
Over 60 percent of employees wouldn’t be able to come up with $2,000 within 30 days for an emergency. Thirty percent would need to make sacrifices to come up with $2,000, 14 percent would have to do something drastic to raise the money and 10 percent wouldn’t be able to find the funds anywhere.
Debts and Everyday Expenses
More than half of mortgage loan and auto loan borrowers are concerned about making payments in the next few months and employees are increasingly turning to credit cards to cover everyday expenses like groceries and takeout.
Many lenders are offering some form of COVID-19 relief, most commonly forbearance, which allows employees to temporarily stop making payments on debts or make reduced payments for a certain period of time. It can alleviate some financial stress in the short term, but employees should keep in mind that the same amount of money is owed once forbearance ends and they may need to make additional payments to catch up.
According to research by Capital One and The Decision Lab, the more financially stressed employees are, the less likely they are to make smart decisions when it comes to spending and saving, which helps explain why nearly 70 percent of employees made an online purchase specifically to cope with the stress of the pandemic.
How Financial Wellness Programs Can Help Employees Get Back on Track
Nearly 40 percent of workers told Edelman Financial Engines that they could benefit from financial advice during the pandemic.
“Companies that give workers better access to financial advice can help alleviate their employees’ financial stress, leading to increased productivity, lower turnover and reduced absenteeism,” O’Donnell said.
Research by Bank of America found that 91 percent of employees who participate in financial wellness programs say those resources have helped them. And, 95 percent of employers who offer those programs agree that these support systems have been effective in reaching their company’s goals.
Financial wellness programs, like Best Money Moves, provide the guidance, tools, and support employees need to reduce their financial stress.
Best Money Moves has tools and features that help employees measure their financial stress, budget for monthly expenses, pay down debt and plan for emergencies. Employees can talk to trained professional financial counselors and educate themselves about everything from investing to co-signing loans to buying their first homes with access to a library of over 700 articles, videos and calculators.
Best Money Moves is also gamified, featuring a point-based rewards system where users earn points every time they log in, enter their information into their profile, work with their budgets, read articles and measure their stress. Each point translates into a chance to win a monthly contest.
If you want to learn more about how Best Money Moves can bring financial wellness to your company download our whitepapers and sign up for a demonstration here.